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Cheque dishonour case

SIVASIVA (FCA, Future CA) (4935 Points)

28 September 2012

Dear all,

Please suggest.

For Dishonour of Cheques case, after sending notice, if the customer fails to pay we can file a Case against him under sec 138 of Negotiable Instrument Act, 1881.

However, my question is, Is there any amount limit? because if the cheque amount is only Rs.100, Whether the law gives such rights to the Aggrieved Party to file Legal Case?

Please comment.

Awaiting Golden Hearts to respond.

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11 Replies

Vaisakh Ayyappan Prakash(VAP) (student) (474 Points)
Replied 28 September 2012

you can file a case..i think there is no restriction ..but still as it a megre amount i would say go and contact the party..and ask him to pay in cash..

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 28 September 2012

There is no Mimimum amount for filing suit under Section 138, the cheque may be of any amount. As righty mentioned in aforesaid reply it will not be feasible to file case for amount of Rs. 100.

(Guest)

Mr. Shivakumar, from the text of Section 138 of The Negotiable Instrument Act 1881, we can infer that the amount of cheque is not an issue, so you can criminally prosecute that person, but as Vaishakh and Smriti rightly advised, it is not feasible to waste your time, money and energy in such petty matters. So, we advise you not to entangle yourself in a legal web, rather you can go for a conciliation. Even after this, if you can not recover this petty debt, then you should be willing to write it off.

I have reproduced the text below for your kind reference. Please read the highlighted words for a quick reading :

“138. Dishonour of cheque for insufficiency, etc., of funds in the account.

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid. either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice. to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-

(a) the cheque has been, presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course. of the cheque as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation.- For the purposes of this section," debt or other liability" means a legally enforceable debt or other liability.”

Regards,

Veeral Gandhi

2 Like

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 29 September 2012

Perfectly answered by our Learned Member Mr. Veeral...

Veral ji great going... keep contributing and keep learning.....

1 Like

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 29 September 2012

The main points before challenging to keep into mind are as under:

1. The cheque was returned by the bank for insufficient fund only;

2. The cheque has been, presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

3. A demand has been made for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

4. The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 29 September 2012

The main points before challenging to keep into mind are as under:

1. The cheque was returned by the bank for insufficient fund only;

2. The cheque has been, presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(Guest)

Thank you very much Ankurji for your encouraging words and adding more value to the discussion.

Regards,

Veeral Gandhi

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17848 Points)
Replied 01 October 2012

Indeed it is my pleasures Veeral ji...

1 Like

manoj (student) (5205 Points)
Replied 01 October 2012

i think six months period changed to three months

1 Like

(Guest)

Yes, Manoj you are correct. I remember that as per RBI circular no. DBOD.AML BC.No.47/14.01.001/2011-12 dated, November 4th, 2011, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument w.e.f April 1st, 2012

Friends, please find that circular attached with this reply.

Regards,

Veeral Gandhi

Attached File : 698334 1064542 rbi circular dated november 4 2011.pdf downloaded: 104 times

1 Like